11. Appendices
11.1 Appendix A – Transcript of the first interview (19th of March 2019)
Respondent: Product Marketing Manager Niccolò Zamboni Researchers: Nicole Valerio
Martin Gasperini
Questions and answers are divided by theme respecting the order of the interview.
Q question A answer
AUTOMOTIVE INDUSTRY
Q1: Sharing economy and sustainability issues are becoming more and more important as well as the AI. How do you see the global automotive industry, and which are the changes in place in this environment?
A1: The automotive industry is rapidly and significantly changing towards three distinctive main pillars:
engine technologies and car power supply, with a focus on the hybrid and electric systems, carpooling and car sharing economies and autonomous driving.
Q2: About these changes in the automotive industry, is Alfa Romeo embracing this new technological trajectory?
A2: Of course, Alfa Romeo is committed to these three important pillars as they are three main innovative directions in the automotive world and the firm has recently showed it through the launch of the new Tonale Concept at the last Geneva Motor Show. One of Alfa Romeo’s most important pillar is the technological and technical innovation. In the past, the company focused on delivering mechanical excellence in an effort to ensure a distinctive driving pleasure.
The current and future challenge that the brand Alfa Romeo is facing is to maintain this technological and technical excellence, with a different interpretation, focusing on electric cars, cars with driving assistance, improved driving safety and last but not least car sharing.
THE BRAND ALFA ROMEO
Q3: How does Alfa Romeo fit within the FCA Group and what does Alfa Romeo bring in it?
A3: FCA is a global OEM group which is the 7th world’s player and which operated in all the continents. FCA has a broad and diversified brand portfolio, starting with the automotive brand and the brands which focuses on after sales services and production of industrial machinery. Within the FCA panorama, Alfa Romeo is a premium brand with a sporting vocation and the objective of representing worldwide the made in Italy and the Italian standards of design and quality. Of course, Alfa Romeo has different vocations from the other FCA’s brands; for instance, Jeep aims at delivering the excellence with its off-road capability and 4x4 drive and other brands such as FIAT, Ram, Chrysler focus on other pillars.
Q4: How has the brand Alfa Romeo changed before and after FCA?
A4: The brand Alfa Romeo has a long history that goes back over a hundred years. Throughout its history, Alfa Romeo has had several evolutions and ownerships and often they went hand in hand. The DNA of Alfa Romeo is the vocation to driving pleasure, sportiness, design and technical excellence.
Q5: Has the Alfa Romeo’s vocation changed during the years?
A5: Between the end of the ‘80s and the beginning of the 2000, Alfa Romeo made some industrial choices focusing mostly on the excellence and design care. With the birth of FCA, Alfa Romeo decided to make heavy investments in order to rediscover the mechanic excellence which was put in the background. The company achieved this objective by investing in innovative technologies and platforms to embrace an even more sporting vocation thanks to the introduction of the rear-wheel drive.
Q6: What is Alfa Romeo trying to create now compared with the vehicles born under the past business models?
A6: Alfa Romeo has always had the objective of offering a product of desire, as it combines several elements which again are the design, the drive pleasure and the technological excellence that altogether manage to deliver to the customers unique and strong feelings both aesthetic with the beauty of the cars and practical during the driving. While the objective of creating a car of desire has never changed, during the years Alfa Romeo carried on several projects with different specific objectives and vocations which resulted in particular product typologies.
What can be said is that also cars produced under the past business model such as MiTo and Giulietta wanted to evoke strong feelings. Indeed, MiTo and Giulietta represented the key products within their segment in terms of technology, design and performance. However, the new car offering that Alfa Romeo is developing encompasses even more advanced technological excellence, showing the positive results of important investments.
Q7: What does it imply for Alfa Romeo positioning in the market? And what are the new, if they are new, competitors which are playing in this market?
A7: Alfa Romeo’s new objective is to fully ride the wave of the premium segment, which has always been one among the company’s objectives and strategies. At the moment, Alfa Romeo has a line-up which allows the firm to have important presence in market segments in which the premium share is higher than the segments of products such as MiTo and Giulietta. Therefore, thanks to the new products it is easier for Alfa Romeo to establish itself in an even higher premium segment.
Q8: How has this shift changed the competitors Alfa Romeo is now facing?
A8: We cannot say that Alfa Romeo has changed its competitors, the main ones have not changed. However, we succeeded in expanding the customer base - of who wants to buy our cars - thanks to the new product offering. This represents the main key of the mission Alfa Romeo is now living in these years: expanding the customer base which is represented by premium consumers.
The segments we covered in the past were customer segments in which the premium presence was lower compared to nowadays; while in the past Alfa Romeo’s cars mainly covered the EMEA region, and this is stated by the different regions data, nowadays Alfa Romeo has a global vocation and presence, since there are segments where the share is higher in regions outside of EMEA borders compared to the past.
Q9: How does Alfa Romeo position itself among competitors such as BMW and Mercedes? Which is the Alfa Romeo positioning?
A9: Alfa Romeo wants to be a benchmark in the premium car market, it wants to represent Italy in the premium world, like the Germans are doing with BMW, Mercedes etc., the British with Jaguar and Range Rover, and the Japanese with Lexus. Alfa Romeo can be defined as the Italian premium offer. Alfa Romeo’s car offering focuses on the target customer which is closer to the one of BMW, since the tagline of both is the driving pleasure and the strong feeling for the brand, rather than other typologies of positioning represented for example by Audi.
Q10: Which is Alfa Romeo’s competitive advantage, comparing it for instance with BMW?
A10: Compared with BMW, Alfa Romeo has a technical and mechanical excellence which is even higher than the one BMW offers. Moreover, Alfa Romeo offers a unique and exclusive Italian design.
SPECIAL EDITIONS AND LIMITED EDITIONS
Q11: How does Alfa Romeo define special editions and limited editions?
A11: The main difference between special editions and limited editions is the presence or absence of limitations, which can be in terms of volume of production or production time frame. I would say that the limited edition can be defined as being a type of special edition, it is a deep dive of the more general special edition concept.
A special edition is characterized by specific features which make it different from the standard product offered and make it unique in its kind.
A limited edition is a special edition which not only has these different features compared to the standard range, but also has a limited-time of production.
Q12: How are special and limited editions implemented in Alfa Romeo?
A12: The purpose of introducing special and limited editions is to communicate to the outside world the values and pillars of the brand through partnerships and/or unique contents which describe even more the technological and design excellence. For instance, we have some editions which aims at recalling the brand history. The main functionality is within the marketing: a special or limited edition represents a model ambassador, a key flag for a specific product model and for the overall brand.
Q13: How do you assess the efficacy of special and limited editions?
A13: A special or limited edition has to generate a profit for the brand, which is measured not only in monetary terms, but also, and perhaps more importantly, in terms of consumers’ awareness and media resonance.
The monetary returns is of course a main KPI; however, the return in terms of brand and product model awareness among the consumers’ minds and the spreading of the brand’s premium and increasingly premium status is the achievement we search for.
Q14: Based on the literature, limited editions are used as a marketing tool and the profits one can make are difficult and limited. How do you argue this?
A14: For a brand like Alfa Romeo, but this is true in the overall automotive industry, the goal is profit maximization. The economic performance is not the main reason why Alfa Romeo chooses to produce a special or limited edition. For instance, the contribution that special and limited editions bring to the total profits is of low economic value.
The difference between a special edition and a limited one is that a limited edition has a more emotional and communication function than a special edition. A special edition focuses more on the mass market function and we can say that it results in larger profits compared to a limited edition.
Q15: During the launch of a new product, do you already have in mind the production of a special or limited edition or do you usually decide later on in the lifecycle of a car which strategy to implement?
A15: It depends on the moment and on the needs of both the brand and the particular model.
Q16: We have seen that Giulietta is born under the old business model but is now promoted and boosted by special/limited editions. Does it represent a specific strategy for the business model fit or alignment? How are the different objectives communicated?
A16: Special and limited edition models can also be seen as a tool useful for this purpose. For example, even though Giulietta is born under the past business model, it has some product features which are sufficient to be communicate as and aligned to new products such as Giulia and Stelvio, as their DNA does not substantially differ. Therefore, it happens that we produce particular range animation in which all these three cars are presented altogether, for example the case of B-Tech or the possibility for tailoring/personalization.
Q17: Generally, customers are influenced by the scarcity effect, even more in the luxury products market, as they value the uniqueness of a product and want to differentiate from the mass market, being labelled in a higher status. Do you value this factor when planning for a special or limited edition?
A17: Definitely. Every activity connected to the product, such as product development, innovation, special and limited editions, is the result of extensive marketing analysis and we consider the needs of both the customers and the Alfa Romeo brand, then combining these together with the communication requirements.
PRODUCT LIFE CYCLE
Q18: Does Alfa Romeo make use of the product life cycle model?
A18: The PLC is one of the fundamental pillars on which every automotive brand must rely on in order to plan its short, medium and long-term strategies. The PLC is a guideline in order to understand which product models need intervention and modification for specific communication or selling purpose.
Q19: When do you take corrective actions, which may include special or limited editions, do you wait to see the sales stall/decline, or do you take them in advance?
A19: Every activity is taken in view to the PLC forecast as the planning of the product life is a key activity of Alfa Romeo brand and the in-depth PLC analysis, especially in the marketing prospect, allow us to foresee and anticipate the moves in terms of product in order to better manage the lifecycle of the model.
Special and limited editions are different from range animations which are embedded in the PLC. The average lifespan of a car is usually up to nine or ten years and halfway we generally act with an MCA (Mid-Cycle Action), with which we introduce both new contents and a design refresh. This allows us to extend the PLC curve, making it more flexible. Special and limited editions, instead of modifying the length of the PLC curve (they don’t act to stretch the curve as the range animation), they either keep the curve flat (instead letting it decline) or, in few cases, they create a new slope which is reflected by a new small spring.
Q20: In this regard, has the PLC always be truthful? Have you ever had a forecast which has not proven to be true? For instance, is there a model which you thought should have go out of production before but instead you kept on producing it since the sales continued to grow?
A20: The PLC model is affected by endogenous but above all exogenous factors. Therefore, based on the competitors’ moves in the premium market, the PLC is influenced and can be defined as dynamic.
Q21a: How does Alfa Romeo define the birth or introduction of a new product and its death or end? Do you define the birth as the launch of a product’s concept or as the first sold piece? Do you define the end as the last produced or sold piece?
A21a: The starting and ending point of a product life are the result of intense marketing and sales analysis, both on a brand and group (FCA) level. The PLC reflects anything that is the starting or finishing of a model production, namely the beginning and the end of the production.
Q21b: Is this the definition even in the case in which sales continue while the production has already ended?
A21b: Yes, it is.
STRATEGY
Q22: Are there substantial changes in the intended and realized strategies? Both in terms of general products and special and limited editions ones.
A22: The strategies of the Alfa Romeo brand are carefully planned, and, in most cases, what is planned will be realized later on in the expected modalities and timeframes. However, there may be both internal and external factors which force us to adjust the intended strategies with minor changes.
Q23: Are special and limited editions used also with other strategic purposes (e.g. cost reduction, differentiation)?
A23: These product strategies have mostly a communicative purpose. However, among the development of special and limited edition, there are some particular strategies to support the PLC, which can be characterized by such product features that they create, based on marketing analysis, a highly competitive advantage.
OPEN INNOVATION
Q24: Does Alfa make use of open innovation?
A24: Alfa Romeo is based on knowledge and information sharing (such as technological and technical innovative knowledge) and on innovation within and outside the brand.
Q25: Which are the main examples of special and limited editions in Alfa Romeo and what do they offer?
A25: The main examples are MiTo, Giulietta Veloce S, special editions B-Tech, 155 GTA, Alfa Romeo Racing, 4C Competizione. Each one with a different vocation, some of these produced in a limited number (B-Tech).
MiTo and Veloce S have the objective of reintroducing the top of the range car in terms of sportiness, with unique technological, technical and aesthetical contents.
The objective of the B-Tech special edition is to introduce in Alfa Romeo new aesthetic and technological contents.
The objective of the limited edition Racing series (Giulia and Stelvio Quadrifoglio) is to be a Halo model of what is the presence of Alfa Romeo in the F1 through Alfa Romeo Racing Team. Alfa Romeo wants to celebrate this with unique technical contents.
The limited edition 4C Competizione wanted to make an already high profile car more personalized/tailored.